I. Yesterday's News
1. The U.S. trade deficit fell in December as exports hit their highest level in more than 1-1/2 years amid record shipments of technology products, but strengthening domestic demand points to further rises in imports, which could constrain economic growth. The Commerce Department said on Tuesday the trade gap dropped 3.2 percent to $44.3 billion, ending two straight months of increases. The trade deficit rose 0.4 percent to a four-year high of $502.3 billion in 2016. That represented 2.7 percent of gross domestic product, down from 2.8 percent in 2015. U.S. financial markets were little moved by the report as the government published an estimate of the goods deficit last month.

2. Differences among Bank of England officials about the outlook for interest rates moved into sharper focus on Tuesday, as one of them said rates might need to rise soon if the growth remains solid and inflation continues to accelerate. But Kristin Forbes, an American academic and external member of the Bank's Monetary Policy Committee (MPC), said she was beginning to grow uncomfortable with the BoE's policy stance. Her comments shed light on the partial split among MPC members. Forbes said previous forecasts showing inflation shooting towards 3 percent had been "just about tolerable" when there was a weak outlook for growth and jobs. But now, she said, there was little sign that the economy was about to worsen.

3. The European Commission has softened a proposal to extend anti-dumping duties on Chinese solar panels, a document seen by Reuters showed. The Commission, which oversees EU trade policy, presented four options, with a recommendation to limit the extension of measures to 18 months, instead of an original 24, and making clear that this period represents a final phasing out of duties that have been in place since 2013. The issue will be put to a meeting of the EU's 28 commissioners on Wednesday, a source said.

4. Usage of the Chinese yuan in key international centres fell 10.5 percent last year, hitting a 29-month low in December 2016, a proprietary index compiled by Standard Chartered showed on Tuesday. Standard Chartered said these measures had also curbed usage of offshore yuan. It added that "tighter capital controls, lingering intervention worries and persistent depreciation expectations have kept genuine CNH users cautious".

5. The U.S. Commodity Futures Trading Commission on Monday ordered Forex Capital Markets, its parent FXCM Holdings LLC and founding partners Dror Niv and William Ahdout to pay $7 million to settle charges it defrauded retail foreign exchange customers. The CFTC said in a statement that "between Sept. 4, 2009 though at least 2014, FXCM engaged in false and misleading solicitations of FXCM's retail customers by concealing its relationship with its most important market maker and by misrepresenting that its 'No Dealing Desk' platform had no conflicts of interest with its customers."

II. Market Overview
FX
The dollar climbed to a more than one-week high on Tuesday as it gained for a fifth straight session, bolstered by technical buying after recent losses as well as political uncertainty in Europe with a slew of elections this year. The greenback posted its best one-day gain since mid-January, rising at the expense of the euro. In afternoon trade, the dollar index was up 0.4 percent to 100.27, recovering from its worst January performance since 1987. It also gained 0.4 percent against the yen to 112.21. The euro, meanwhile, fell 0.5 percent to $1.0695, posting its worst daily performance in about two weeks.

Precious Metals
Gold slipped from a three-month peak on Tuesday, pressured by earlier strength in the dollar as the euro fell on weak German industry data and nervousness ahead of the French elections.  Spot gold was last at $1,233.64 an ounce, after rising to $1,235.78, its highest since Nov. 11. U.S. gold futures settled up 0.3 percent at $1,236.10.

Commodities
1.Crude Oil
Oil prices tumbled more than 1 percent Tuesday, pressured by growing crude stockpiles in the United States as evidence of a burgeoning revival in U.S. shale production could complicate efforts by OPEC and other producers to reduce a supply glut. Brent crude settled down 67 cents, or 1.2 percent, at $55.05 a barrel, while U.S. crude ended 84 cents, or 1.6 percent, lower at $52.17.

2.Base Metals
Copper prices fell on Tuesday as the dollar rose and worries about demand growth in top consumer China and elsewhere subdued sentiment, but concerns about supply curbs helped limit losses. Benchmark copper on the London Metal Exchange ended down 0.9 percent at $5,795 a tonne. Tin closed 1.5 percent lower at $18,930 up from an earlier $18,630, its lowest since August, as higher inventories in LME-approved warehouses eased concern about supply.

U.S. Treasuries
U.S. Treasury yields fell to their lowest in nearly three weeks on Tuesday, drifting past significant technical levels, as fixed-income investors worried that President Donald Trump's pro-growth policies could be hamstrung by his focus on other issues. Benchmark 10-year note yields fell to 2.37 percent, their lowest since Jan. 18, with other Treasury yields falling broadly to their weakest levels since mid-January. Prices on the 10-year were last up 7/32 to yield 2.38 percent.

Stock Market
1. U.S. Equities
Wall Street rose slightly on Tuesday, with the S&P 500 ended barely higher, while the Nasdaq managed to scratch out a new record as gains in big tech and consumer names. The Dow Jones Industrial Average rose 37.87 points, or 0.19 percent, to 20,090.29, the S&P 500 gained 0.52 points, or 0.02 percent, to 2,293.08 and the Nasdaq Composite added 10.67 points, or 0.19 percent, to 5,674.22.

2. Hong Kong Equities
Hong Kong stocks were little changed on Tuesday, with buying interest from the mainland countered by weakness in global markets. The benchmark Hang Seng index dropped 0.1 percent, to 23,331.57 points, while the Hong Kong China Enterprises Index gained 0.1 percent, to 9,846.06 points. The energy sector was among the biggest decliners, down 0.7 percent at the close, as oil prices remained under pressure after losing nearly 2 percent on Monday. But resource stocks added 0.6 percent, helped by a firm commodity market.